Record shortfall in tax revenue likely to hit economy

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ISLAMABAD: Authorities in Islamabad fear that the election-year tax revenue collection would be short of target by at least 20 percent, a slump experienced never in the past. The projected target for the year was Rs2.193 trillion, whereas, the final figures of collection up to March 2013 (nine months of the present financial year) are as low as Rs1.346 trillion. To meet the target, the FBR will have to collect another Rs840 billion in the next three months (April-June) which poses a stiff task of collecting Rs280 billion a month.

The FBR has collected Rs150 billion a month in the concluded nine months of the current financial year (1346/9) and the relevant authorities divulging these figures worried that improving monthly collection by Rs130 billion over the performance of the past nine months in the electioneering and post-election political scenario would be ‘next-to-impossible.’

Failing to collect tax revenues at this pace, the FBR would be leaving the Finance Ministry in a mess, as the latter would not be able to pay up the critically demanded sums, especially in the electrical sector, where the oppressive outages could be stopped only by marinating the circular debt-clearance at over Rs100 billion a month, given the accumulating non-paid amounts on account of which the companies producing power are unable to buy fuel required for generation.

When contacted by The News two days ago, the suspended Chairman Ali Arshad Hakeem said that he was very happy as on his last day the domestic sales tax went up by 60 percent. In the last month, he said, the tax collection of domestic taxes increased by 40 percent.

He said that he had worked hard and no one could prove any wrongdoing during his tenure. “I developed systems and moved against powerful lobbies during my tenure as Chairman FBR,” he concluded.

This situation, the FBR and Finance Ministry sources said, was critical also in terms of economic performance vis a vis last year, as the GDP-improvement target would not be achieved if the tax revenues are collected with an improvement of only 5 percent this year over the last.

They added that the GDP, presently only at 3 percent, was targeted to grow by at least 4 percent this year, which cannot be hoped in the index of present tax-collection volumes. They conceded that a windfall of 12 percent inflation was also not achieved, and that is worrisome.

When asked if the revenue collection would particularly take a dip on account of the electioneering-induced slow-down in March and in the April-May period and in the government-launching period, one FBR official (who spoke in a situation when this organization began running without a boss from Tuesday) said: “If there is chaos and political indecision, the country might not be able to meet the target, and a shortfall of at least Rs55 billion would be the result. If it happens, it would be unprecedented in the history of tax collection.” No official of the FBR was ready to speak on the record because of the turmoil in the organisation after Chairman Ali Hakeem was suspended by the IHC.

 

Courtesy: The News


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